Today is day two in my series on 30 tips on how to grow your small business. Like I said on day one, my goal is for you to be able to apply each step in roughly 30 minutes or less. I know that even if you just apply one step out of the 30 you’ll see positive results!

Day Two: Get Control Of Your Finances – Expenses

Everyone says “It takes money to make money” but what does that mean?  Sometimes I hear that phrase used to justify poor spending choices or lack of financial control.  Instead of just thinking you must have certain costs and expenses to run a business, today let’s take the time to review what your expenses really are.  If you can get control of your finances in your small business you can achieve a more relaxing and profitable business model.  So let’s get started.

1. What does your small business cost each minute, hour, day, week, month, and year?

If you can’t answer that question off the top of your head then you need to figure it out quickly!  I’ve created a simple spreadsheet that helps you do just that.  You’ll see that after you enter your own costs and revenue into it you can see your a clear break down of expenses.  Click here to receive the spreadsheet from me right away.  You can watch a brief explanation of how I use the spreadsheet here as well.

The basics steps to learning what your expenses are involves taking 3 months of bank statements (you can usually download these from your bank in Excel format) and categorizing each expense into something like rent, utilities, vendors, hardware, and so on.  Then total up each category and divide the total by 3.  This will give you a rough average for the monthly cost in that category.  When you add the costs into the spreadsheet I’ve included here you’ll then be able to make decisions based on real costs.  If you haven’t done this yet for your business, or if you haven’t done it recently, take action now!  Get control of your small businesses’ expenses by learning what they really are.  Once you know what they are you can take step two.

2. Cut Out The Fat

Every small business no matter how new or old has accumulated services or fees that no longer apply to their needs.  That training program you started beginning of the year my no longer be applicable.  The extra cell phone minutes on your plan might not be necessary now that you have a more reliable office phone.  Maybe flying first class doesn’t really make sense anymore.  Whatever it is, take a look at your total expenses and find 10%.  If you can find and save 10% it’s like making at least 10%.  Sometimes I find that saving 10% in expenses actually feels like making 20% on the bottom line!  When you find the expenses that can be cut out, remove them immediately!  You can’t afford to wait another minute.

3. Do More With Less

It’s fun to buy the toys that we think will make doing our job more interesting or easier.  The truth is that only some of the things we pay for actually have any relation to making us money in our small business.  Today after you’ve gotten a clear picture on what your expenses really are and you’ve cut out the obvious extras take a final look and see how you can do more with less.  Plan strategically to use less of an expensive resource or get even more value out of each trip when you leave the office and go to see clients.  Think hard about how to maximize each dollar you spend.  I’m sure that you if really challenge yourself you can find a few areas that have room for improvement.

Anything that we can do to raise personal savings is very much in the interest of this country. ~ Alan Greenspan